Discuss the benefits and challenges when implementing Industrial policy?

How does comparative advantage relate the implementation of industrial policy?

The benefits accruing implementation of Industrial Policy (IP) include

• Improving industrial production. IP foster sustainable production activities as well as economic and social transformations which promote productivity and industrial growth hence promoting economic progression.
• Cordial industrial relations. The policies play a significant role in promoting sustainable industrialization as the policies help in establishing friendly relations between workers and management.

The implementation of the industrial policies faces various challenge, such as Political influence. Important to note Industrial policies are often captured by politically powerful groups who use them for their selfish interests as opposed to acquiring the intended structural transformations. The political capture hinders successful implementation of IP.

Comparative Advantage associated with IP

The IP can be used as a source of comparative advantage through various ways such as acquiring exclusive rights like licensing and import controls which create artificial comparative advantage. The move helps in promoting market leadership. Moreover, the exclusive rights improve market dominance of a company.